What happens when I get an offer, and when is the deal binding?

Reading the offer

An offer arrives as a signed agreement of purchase and sale with schedules. The parts that matter most are the price, the deposit and when it is payable, the closing date, the chattels included and fixtures excluded, the conditions and their deadlines, the irrevocable date and time, and any schedule the buyer's agent has added.

Under Ontario's Statute of Frauds, a contract for the sale of land must be in writing and signed to be enforced, so a verbal yes does not bind you. Send every offer to your lawyer before the irrevocable time expires; the review is short and the changes we suggest are usually to closing mechanics, not price.

Counter-offers and sign-backs

If you change anything, even a date, you have rejected the offer and made a new one. The buyer's original offer is gone and cannot be revived by them or you. Your counter-offer has its own irrevocable time and the buyer may accept, counter again or walk away.

With several offers, your brokerage must tell each buyer how many written offers exist. You may also direct the brokerage to disclose the substance of competing offers, apart from personal information, if you decide an open process will serve you. You may accept any offer, counter one, or reject all; you do not have to take the highest price.

The deposit

The deposit is paid after acceptance, within the time the agreement sets, usually to the listing brokerage, which holds it in a trust account regulated under the Trust in Real Estate Services Act, 2002. It is credited to the purchase price on closing. It is not your money before then and it does not become your money automatically if the buyer defaults; release requires the buyer's agreement or a court order.

A deposit that is late or bounces is a breach. Tell your lawyer immediately rather than waiting, because how you respond can affect your remedies.

Conditional or firm

Most buyers include conditions: financing, a home inspection, for a condominium a satisfactory status certificate, sometimes the sale of their own home. Each has a deadline. If the buyer waives or fulfils the condition in writing by then, the deal becomes firm. If not, the agreement ends and the deposit is returned.

Sellers can have conditions too: a lawyer's review, a Certificate of Appointment in an estate sale, or a spouse's consent. A condition on the sale of the buyer's home is usually paired with an escape clause that lets you keep marketing and force the buyer to firm up or step aside if a better offer arrives.

Changing your mind

Before acceptance you are free. After acceptance, and once any conditions are waived, you are bound. A seller who refuses to close on a firm agreement faces a claim for the buyer's losses and, because each property is unique, sometimes an order to complete the sale. The deposit does not limit your exposure.

If circumstances change, the route is negotiation: a mutual release, an amended closing date or a price adjustment, each in writing. Never simply stop responding.